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Board of Governors of the Federal Reserve System
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Preserving Minority Depository Institutions

Section 308 of FIRREA

The System's PFP program was established in 2008, before required by law, because the System recognized the importance of MDIs and wanted to take steps to preserve and promote these institutions. The System supports an inclusive financial system and understands the challenges inherent in providing access to credit and other financial services in traditionally underserved areas. As such, the System remains committed to identifying additional opportunities to support the preservation of these organizations. Further, section 308 of FIRREA, as amended by the Dodd-Frank Act, requires:

  1. CONSULTATION ON METHODS.--The Secretary of the Treasury shall consult with the Chairman of the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Chairman of the National Credit Union Administration, and the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation on methods for best achieving the following:

    1. Preserving the present number of minority depository institutions.
    2. Preserving their minority character in cases involving mergers or acquisition of a minority depository institution by using general preference guidelines in the following order:
      1. Same type of minority depository institution in the same city.
      2. Same type of minority depository institution in the same State.
      3. Same type of minority depository institution nationwide.
      4. Any type of minority depository institution in the same city.
      5. Any type of minority depository institution in the same State.
      6. Any type of minority depository institution nationwide.
      7. Any other bidders.
    3. Providing technical assistance to prevent insolvency of institutions not now insolvent.
    4. Promoting and encouraging creation of new minority depository institutions.
    5. Providing for training, technical assistance, and educational programs.

  2. DEFINITIONS.--For purposes of this section--

    1. MINORITY FINANCIAL INSTITUTION.--The term "minority depository institution" means any depository institution that--

      1. if a privately owned institution, 51 percent is owned by one or more socially and economically disadvantaged individuals;
      2. if publicly owned, 51 percent of the stock is owned by one or more socially and economically disadvantaged individuals; and
      3. in the case of a mutual institution, the majority of the Board of Directors, account holders, and the community which it services is predominantly minority.
    2. MINORITY.--The term "minority" means any black American, Native American, Hispanic American, or Asian American.3

In addition, section 367 of the Dodd-Frank Act amended FIRREA to require the supervisory agencies to submit an annual report to the Congress containing a description of actions taken to carry out FIRREA section 308.


References

3. Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183 (1989). Return to text

Last update: July 26, 2016

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